US President Donald Trump on Wednesday struck an unexpectedly upbeat note on inflation, saying that he “loves” it. The response came after fresh data showed that consumer prices in the United States had risen at their fastest annual pace in more than three years. Responding to a reporter’s question about the latest inflation figures released earlier in the day, Trump said, “You know what I really love? I love inflation.” He later elaborated on his remarks, saying that “the numbers were great” and adding, “I love it.”This was unlike Trump’s previous stance when he dismissed the affordability issue as a hoax, started by Democrats, nor he claimed that he was bringing down the cost of living. The US labour department reported that consumer prices rose 4.2% in May compared with a year earlier, up from 3.8% in April. It was the third consecutive month in which inflation gathered pace. Month-on-month, prices increased 0.5%, following gains of 0.6% in April and 0.9% in March. Despite inflation remaining well above the Federal Reserve’s 2% target, Trump welcomed the latest figures.The president argued that the latest rise in prices had been driven largely by energy costs linked to the Iran war. According to government data, energy accounted for more than 60% of the monthly increase in inflation.
US takes ‘millions of barrels every night’
Trump maintained that inflationary pressures would ease once the conflict ended and claimed his administration had already taken steps to stabilise oil markets through an operation in the Strait of Hormuz.“I’m just announcing today for the first time, but we’ve been taking out millions of barrels of oil, millions of barrels every night,” Trump said.In a post on social media, he stated that the effort had begun the previous month and had “resulted in more than 100 MILLION Barrels of Oil making its way through the Strait, and into the Open Market. More than 200 Commercial Ships have safely traveled through the Strait.”The Strait of Hormuz had effectively been shut by the conflict since February 28. Before that, roughly 20 million barrels of oil moved through the route each day, meaning the volume cited by Trump represented the equivalent of five days of normal shipments.There was, however, no immediate data available to verify the president’s figures, while it remained unclear what involvement the US military had in facilitating the movement of oil.Trump also said the operation had helped pull crude prices below $90 a barrel after they had crossed $110 at the beginning of April. However, oil markets moved in the opposite direction on Wednesday. US crude futures rose around 4% to nearly $92 a barrel amid further US airstrikes against Iran and retaliatory action by Tehran against countries in the region.The White House defended the administration’s position, noting that several household expenses had declined in May compared with the previous month, including the prices of new vehicles, prescription medicines and motor insurance.“President Trump has consistently maintained that oil and gas prices, and thus overall inflation, will plummet once the Iran situation is resolved, and the administration will continue pushing our affordability agenda to enable Americans to keep more of their hard-earned money,” White House spokesman Kush Desai said in an email.
US inflation numbers
The latest inflation figures pointed to continued strain on household budgets. Prices have been increasing faster than wages for months, weakening consumers’ purchasing power. Americans have increasingly relied on savings to sustain spending, while growing numbers have fallen behind on credit card repayments. Retailers have also observed customers adjusting their habits, including purchasing smaller amounts of petrol.The data showed that rising costs were not confined to energy. Clothing prices rose 0.3% in May and were 4.8% higher than a year earlier. Airline fares jumped 2.7% during the month and were almost 27% above year-ago levels, while electricity prices increased 0.6% in May and 5.9% over the past 12 months.Food prices showed a slower pace of growth. Grocery costs edged up 0.1% from April, although they remained 2.7% higher than a year ago.Excluding food and energy, core inflation rose 0.2% in May, down from 0.4% in April. On an annual basis, core prices increased 2.9%, slightly higher than April’s 2.8% reading.Attention is now turning to the Federal Reserve, which is due to hold its next policy meeting under new chair Kevin Warsh. The central bank is widely expected to leave interest rates unchanged. However, with inflation remaining elevated, markets increasingly anticipate that rates could rise before the end of the year.Any increase in borrowing costs could eventually feed through to higher mortgage rates, more expensive car loans and increased costs for businesses seeking credit.
